Friday, November 06, 2009

Spain's Beckham Law hurting Spanish football

An email TJN just received says:"There's a furore here in Spain over a government proposal to rescind the `Beckham law' (Ley Beckham), introduced just before David Beckham (very regrettably, in my view) moved to Real Madrid.

The government's budget proposals would mean that non-resident foreign workers earning 600,000 Euros or more per year would no longer pay tax at 24%, as under the Beckham law, but the top tax rate of 42%. The Spanish football clubs claim this would kill what they regard as the best football league in the world.

But their fury is not unconnected with the fact that apparently most of them have contracts with their non-Spanish superstars on a net salary basis, so that the higher taxes would have to be paid by the clubs, not the stars. In any case, it would be non-retrospective, so Cristiano Ronaldo's pay is safe.

The government parliamentary spokesman described the proposal as `an exercise in tax justice, aimed at promoting tax equality at a time of serious economic crisis'."

A Spanish email correspondent to TJN replied that:

"The so called "Beckham Law" was meant not for Beckahm to come to the Real Madrid but to attract the return to Spain of scientists working in foreign countries but Football clubs took advantage."

And we are delighted to see the Spanish start Raul quoted as saying, on the subject:

"Everyone has to play by the same rules . . . the good players will keep coming."

Now in this context, it is worth considering something written about British football by Richard Brooks in The First Post a couple of years ago.

"Have you noticed how we only ever win the World Cup under a Labour Government?" quipped Harold Wilson in 1966 when England last saw footballing glory, three months after Wilson's re-election on a wave of national optimism.

Now, with England dumped out of the 2008 European championship in the same week that Government incompetence has reached unprecedented levels, we know the link between footballing and political fortunes works the other way too.

But whereas Wilson didn't seriously expect credit for winning the World Cup, the present Prime Minister can be directly blamed for yesterday's calamity at Wembley.

How so?

Much will be written about the demise of the national side of a country that boasts the world's richest league. Most pundits will rightly blame the numbers of foreign players in the Premiership, denying English youngsters the chance to become the next Hurst or Banks. The most recent week's team sheets showed that just 74 of the 220 players starting Premiership games were English.

So why do overseas players now dominate? As the supposedly economically competent Gordon Brown would understand, it's because they enjoy a huge and unfair competitive advantage over British players. Tax rules allow foreign players to claim 'non-domicile' status and, with the help of clever lawyers, pay 40 per cent less tax than their British rivals on much of their income. Savvy clubs and agents aren't slow to exploit the gap: Treasury figures reveal 300 such 'non-dom' players.

In opposition, Brown promised to eliminate this tax break (which coincidentally benefits many major Labour donors), but for 10 years as Chancellor he refused to do so in the face of fierce lobbying from its wealthy beneficiaries. In the process English football was denuded of home-grown talent."

So if this perverse subsidy to wealth is abolished in Spain, not only will Spanish taxpayers benefit, but it seems likely Spanish football will too.

3 Comments:

Most of your post about it improving Spanish football and the link with England is nonsense.

Spain won the UEFA European Championship last year! And the current England squad has the best form in ages (with a foreign manager). The biggest problem with English players is that they tend to opt for playing in a lower division (if they don't manage it in the premier league straight away) instead of moving to a top foreign league.

well indeed, the link itself in the blog was probably a bit tenuous and artificially constructed. But still, each element - the spanish story, on the one hand, and the english one, on the other, has merit in its own right.

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The Tax Justice Network (TJN) is an international, non-aligned network of researchers and activists with a shared concern about the harmful impacts of tax avoidance, tax competition and tax havens.
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